Axon contributes to define the fundamentals for a correct identification and evaluation of assets reversal in Brazil


Invited by ANATEL as asset valuation experts, Axon drove the discussion on the relevant aspects that should be taken into account by presenting a framework based on 5 techno-economic criteria.

On July 19th, Axon Partners Group participated in a workshop titled “Bens Reversíveis” (Reversible Assets in English) that took place in Brasília. Axon Partners Group was invited by ANATEL, the Brazilian telecommunications regulator, as asset valuation experts in the telecommunications industry. The workshop hosted by the Board Members of ANATEL was an effort to bring together international and national Telecoms experts to discuss the issues of the asset reversal scheme for fixed telephony concessions in Brazil, and its legal, regulatory, technical and economic implications.

After more than 20 years since the privatization in the Brazilian telecommunications sector, a process that ended the state monopoly of former Telebras, the legal and regulatory frameworks require undergoing major modifications. Among other, there will be a need to facilitate a transition from the current concession regime to authorizations and the modernization of universal service obligations of fixed telephony services. A new regulatory model can be instrumental in helping nationwide economic growth, universalization of broadband services and healthier telecommunications industry and investments.

ANATEL Board Members, Aníbal Diniz, Emmanoel Campelo, and Leonardo Euler de Morais participated in the workshop. The latter emphasized in the opening the importance of these issues for the development and universalization of broadband in Brazil. They stressed the need to approve a bill which will enable the change from concessions to authorizations (PLC 79), given that “the longer the approval of the Project takes in the Senate, the greater the devaluation of the reversible assets to be converted into broadband investments will be”.

Axon Partners Group led a panel about “Exploring the regulatory and economic fundamentals for a correct identification and evaluation of assets reversal”. The presentation can be found here: Axon link

During his intervention, Rafael González, Partner at Axon Partners Group and Head of the Americas office, drove the discussion on the relevant aspects related to the reversal scheme for public telephony concessions in Brazil and the review of the regulatory framework applicable to Telecom asset valuation. The proposed framework is based on 5 techno-economic aspects to take into account in the asset reversal process: (i) geographical perimeter; (ii) network perimeter; (iii) service perimeter; (iv) existence of convergent network elements and application of the proportionality principle; and (v) accounting/financial reference for asset valuation.

Rafael also provided a brief overview of international case studies relevant to the asset valuation exercise (incl. Colombia, United Kingdom, Portugal and Costa Rica) and then reviewed the key aspects to ensure regulatory certainty, transparency and proportionality. Rafael highlighted the importance of an adequate resolution of current challenges for the perception of legal security and protection for foreign investment in Brazil.

Recently, Rafael participated as expert witness in a similar case in Colombia, the arbitration for the reversal of wireless assets linked to the mobile concession of Telefonica Colombia. Furthermore, on behalf of ANACOM, the Portuguese regulator, Rafael reviewed the asset identification and compensation to Portugal Telecom for the breach of Universal Service contract and the broadcast and distribution of the analogue television signal.

In Axon Partners Group, Rafael has led more than 50 projects related to asset valuation worldwide, including due diligence, spectrum valuation, disputes resolution, litigation support, and network and cost modelling worldwide. Among others, he has participated in the review and calculation of compensations in Spain, Portugal, Italy and Greece under universal service and concession obligations.

We thank again ANATEL for the invitation to participate in the workshop and contribute to the discussions regarding the modernization of the regulatory framework in Brazil.

Please, find further details about our expertise in our webpage and do not hesitate to get in touch with our experts on these matters.

Related links in ANATEL and Teletime web pages.

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